With the price of gas constantly rising, more people driving hummers are finding visits to fill the tank an expensive business. It’s tempting to think of trading in the guzzler and buying a hybrid. A Toyota Prius, for example, will give you not less than 45 miles per gallon – drive it carefully and you’ll do a lot better.

Better still some of the hybrids qualify for a federal tax incentive. The government may talk big about drilling for oil but encouraging people to buy fuel-efficient cars is really good first step to reducing America’s dependence of foreign oil. Check out your own state. Many are also offering a range of incentives to reduce tolls, the cost of parking, and so on. When you add up the savings on gas and in taxes and charges, a hybrid can look a good deal. Auto insurance dealers are encouraging the trend with discounts of up to 10%, although the actual discount depends on the type of hybrid you buy. As with all auto insurance, you need to shop around and get as many online quotes as possible before buying.

But before you begin looking round the showrooms, take a deep breath. That Hummer is losing its value fast. The secondhand market has collapsed because only a very few buyers want to take on those gas costs. You’ll get only a fraction of its value if you trade it in now. So that new hybrid suddenly got a lot more expensive. You’ll need a much bigger loan which may be difficult to get at a good rate of interest because of the credit crunch. Once you add in the loss of capital tied up in your Hummer and the increase in borrowing costs, your payback period just got so much longer.

What about Payback period? If you’re buying to make a saving, this is the time it takes for you to realize the saving. In this case, you are probably better holding on to the Hummer. The premiums will fall because the replacement costs are lower on a comprehensive policy. Traffic accidents are less dangerous in something built like a Sherman Tank. Some of the smaller hybrids crumple up in an accident. So don’t despair on the auto insurance front. It really may made better economic sense to keep the guzzler than change to a hybrid.

You would not be surprised anymore to find an advertisement about possible loan or borrowing while going through your mail-box. What is the reason for it? Maybe we got used to it as nowadays advertising loans became as common as advertising clothes and hair products. You can get links to sites that help you borrow some money through e-mail, online search, paid ads, and referrals.

Let us talk about short-term loan benefits. First of all, it is fair to mention that this loan is the most used one and the least problematic. You are not required to provide too many documents and it is a definite plus. All you need to show us you SSN and your checking account. The account is used to deposit the loan after your submission has been approved.

The services granting short-term loans give you the possibility of extending the loan. Of course, this possibility is not a free one. You will be charged an additional fee. But we should be honest with you, not all of the US states will allow this to happen. Some states have restrictions and certain legislation criteria that stop one from being able to do so. You also have to keep in kind that flipping over your short-term loan will result in high APR on the initial amount you have borrowed. So please protect yourself from making a big mistake, as it may result with a quite long bill.

The Consumer Federation of America has provided us with a research that shows how much money most Americans need to borrow on a daily basis. The research has stated that the most popular amount to borrow is $500, while the numbers may vary from $200 up to $2500. The rates differing by the services were quite diverse, ranging from $10 to $30 per $100 borrowed. The rate that was the most popular among lenders was $25 per $100, or 650% APR in case the loan is paid off within two weeks. This way we see that short-term loans are more than familiar to people and more than that, the world has accepted short-term loans quite willingly.

Short-term Loan Pros and Cons

Payday loans are often judged by the critics being the means of getting people into even more debt. We will not deny the fact that loans are not the most profitable thing but we also will not state that payday loans are bad. It all depends on how you use the situation. If you know how to deal with payday loans and you are sure you can trust yourself with the decision of borrowing some money, you are not in danger. The major rule here is to pay it off quickly. The longer you take with the debt, the more problems it is going to create for you. And you will not want that. So be aware of it and stay cool – it all will be fine as long as you know how to handle your money right.

There are times when people complain about the number of laws there are in this country. How is anyone to keep track when Capitol Hill keeps adding new laws to the statute books? Even the lawyers find it hard to stay on top of all the changes. That leaves ordinary people with no chance at all. Yet, in some areas, the laws can be very helpful to ordinary people. They may not even need to know if government changes the way in which business is regulated.

The people can be protected without them ever being aware of it. So the lobbyists start to work. This is big government not little government. This is the nanny state not the rugged individualism that made the US such a great place to live. People should be allowed to stand or fall on their own without the state having to get involved. We have all heard it all before. And the reason this time? Well, there is a bill in the Senate proposing a national cap on the interest rates charged on consumer loans. The maximum annualized rate would be 36%. Needless to say, the loan industry is up in arms. It seems no-one can lend money and make a profit if interest is pegged at such a low figure.

So will the law change? Let us go back to 2006 when the Department of Defense persuaded Congress to impose the same cap on all loans made to military personnel. According to the DoD, the families of those in active service were being victimized. Many families were being forced to pay 400% and more in annual interest. Curiously, no-one chose to see the same rates being charged on loans to ordinary people. As it stands, only fifteen states have stepped in to protect their citizens. When people take cash advances against their next pay check, they are so easily caught in a spiral of debt they cannot escape. Those promoting the current bill justify the general cap by saying there will be no cost to the taxpayer and it will save billions of dollars from being sucked out of the pockets of the poorer members of our society.

We need to be clear about one thing. Payday loans do serve a useful function. When many are denied access to bank overdrafts and their credit rating is not good enough to get generous limits on their credit cards, these loans can bridge people when there is a financial emergency. The facility is available with few formalities, the money deposited in the bank account the next working day. It is a quick an easy solution to a short-term problem. But, as it stands, the lenders are acting in a predatory way, abusing those who are dependent on their loans. If the bill passes, the maximum interest chargeable on a payday loan will be 36% but states can enact lower limits. In Arkansas, for example, the cap is 17%. Help is on the way so long as the lobbyists do not sideline this protective measure.

Everywhere you look, you see stories about the bailouts. It seems bankers, insurance companies and auto manufacturers can’t survive unless the government gives them tax payers’ money. This is one of those chicken-and-egg moments.

If large companies go bust, that throws a lot of people out of work. The unemployed stop buying “stuff” at their local stores so the stores don’t need as much “stuff” to sell. The people who supply and make the “stuff” don’t have enough business so they go bust. And so on. That’s what a recession is. One of the hardest things to watch is the number of properties in your neighborhood being foreclosed. When there is a family emergency of any kind and it affects the budget, the mortgage is one of the first things that comes under pressure. So when you drive around your area, you can pick out the empty homes on every street. Some just look tired with the yards overgrown and the paint peeling. Other have been vandalized or, more systematically, all the fixtures and fittings of value have been carefully removed for use elsewhere. These are the tombstones of people’s hopes for a family home and a better future. Worse, they are a blight on the market. No-one is buying. Every empty building testifies to the lack of demand. That means the value of every other property in the street is also dropping fast. Negative housing equity threatens everyone who has bought within the last five to ten years.

So when your own budget is tight and hard choices have to be made, should you get a loan to cover an outstanding mortgage instalment? It’s a real temptation, right? There you are, hunkered down behind the sofa, hoping no-one will notice you. Except you know that’s not how the world works. These big companies have computers that spit out warning letters and threats. So, suddenly, a loan looks like a good option.

Stop and think about this. There are payday loans available without any real formalities. So long as you still have a job and a bank account, you will almost certainly get up to $1,500 in a lump sum from some of the lenders. That sounds good, doesn’t it? Having that extra cash would solve a lot of your current problems, wouldn’t it? Except it has to be paid back at the end of the month to avoid the interest payments going through the roof. Every cent you borrow over your lifetime has to be paid back plus interest. The advantage of the mortgage is the interest rate is low. Interest on a payday loan can be several hundred percent! Do the math. Low interest rate on mortgage vs. high interest rate on loan. Which is the better loan? The answer is obvious. So pick up the phone and start negotiating with the mortgage holder as soon as you see there are problems. Don’t wait until you are in arrears. Deal with the problem immediately. Speak to them and write letters confirming your financial position. Ask for the terms to be renegotiated. Don’t use a high interest loan to pay off a low interest debt!

The world used to be such a simple place. Everyone had cars, gas was cheap and no-one thought twice about driving everywhere. Suburbs became exurbs and journey lengths expanded. Public transport wilted, and people added extra pounds of body weight as walking dropped out of favor. Now, the world has changed. Gas prices peaked at more than $4 a gallon and, although they dropped down again, the recession has taken money out of household budgets. People no longer spend freely on driving. There’s no public transport in the exurbs so people are cut off from their work and the local amenities without a car. Even if people do start walking again, they live too far out of the nearest towns and cities. The choice has become simple. Life without a car for most is impossible so people keep their old car going longer or they get into rental cars.

The strategies break down as follows. Sharing cars as a way of getting children to school and parents to work has been around for a while. All it requires is some give and take about when people are going to make their journeys and travel suddenly becomes cheaper with shared costs. Except, whoever is doing the driving needs to be sure their policy covers paying passengers. Some insurers take a narrow view that paying passengers turn the deal into a business like a taxi. This is a trap to force car sharers to pay more to insure. Always shop around to get the best cover to ensure that everyone in the car is covered for their medical costs should there be a traffic accident. The more interesting developments are coming in the car rental business. Instead of the classic temporary holiday or full-time business uses, there is now a new car pooling system. Cars are stored in garages around cities. When you want to use a car, you go online and make a booking. The system tells you where the nearest car is to be found. You pick it up and drop it off at the nominated garage, paying only for the hours you have the car in your possession. The guys who work out statistics reckon that the average person spends about $8,000 a year on car ownership. That’s the purchase price, any sales tax and loan interest, the loss of value as the car ages, the cost of car insurance, maintenance and repair, and so on. Most car pooling schemes charge around $15 an hour with the cost of gas and insurance included (with you paying the cost of getting to and from the nominated garage).

Except you need to be careful about the terms of the car insurance included in the package. The rental company is interested in protecting the capital value in the cars so, before you sign up, check the cover for personal injuries. It may be worth paying an extra few dollars to top up the cover for medical expenses and loss of earnings. That said, if you give up your own car, there are big cash savings so long as the auto insurance cover is adequate. And, no desk agents giving you a hard sell every time you pick up the car!

When you’re sitting at home worrying about the mounting pile of bills to pay, it’s easy to lose sight of the big picture. Fact is, just as you’re in a new world of hurt, there are other people hurting as well. In this case, the people are the inventors in the insurance industry. They all bought shares in these big corporations when the prices were high, never thinking that the world could suddenly turn sour. Although it’s a mutual insurance company, let’s take State Farm as an example of what’s happening across the industry. This is one of the biggest insurance companies in the US and it’s just turned in an operating loss of $542 million for 2008. Its net worth just dropped a whole 16%. Now, you have to understand this company did not get caught up in mortgages of any prime. There were no securitised thises or derivative thats. This company has just been caught in the general collapse of stock exchange values.

To understand, we need to look at how insurance companies work. They charge most policy holders with a vehicle or a home a monthly premium. This brings in a small mountain of cash every month. That money is invested until it’s needed to pay out on claims. Some goes into fixed-income products. The rest goes into shares. As you may have noticed, the Dow and other stock exchange indexes have been in free-fall. The result is that State Farm has lost the capital value of the investments and, in many cases, no longer receives any income as interest or dividends. This might have been manageable except for this little thing called global warming that no-one believes causes hurricanes and other weather catastrophes. The last two years have seen an big increase in weather-damage claims. Put the loss of investment income and the unexpected rise in claims together and you turn a $5.46 billion profit in 2007 into a loss in 2008.

Should this make you worry? Well, look at it this way. The insurance industry is suddenly making a loss. Shareholders in general and the policy holders in State Farm are not happy. Senior officers of the companies want their bonuses. The for-profit companies are tempted to raise the premiums across the board to get their earnings back into profit. Except with a recession threatening to turn into a depression, that’s not going to work. Make the policies unaffordable and people stop buying. That’s why State Farms just dropped its auto insurance rates in Georgia by an average of 1.5%. For the record, this means the current premiums are 12% lower than five years ago. Since State Farms insures around one quarter of all vehicles on Georgia’s roads, this is a good deal. So the next time you’re shopping round for a cheap car insurance policy, you may be pleasantly surprised that the premium rates from an increasing number of insurers have fallen in other states. The next bill may not be quite as painful as you fear.

As the boomer generation has aged, every part of the social system has had to bend to fit them all in. First it was the school system, then higher education. Now, those who have survived the march of time, are finally approaching retirement making the sale of medical insurance a much more competitive market. We caught up with Dave in Oakland and asked how he was preparing for his retirement. He managed a harassed smile.

“My 401(k) is dropping in value. I’m rethinking my retirement.” We looked back at his plans last year. “I was all set up to finally do some traveling. Since my wife died, I’ve been waiting on retirement to take off and see the world.” He was pitched into health insurance that would give him cover outside the US. He said he passed the time bugging local agents to give him chapter and verse on all the policies.

Then the stock markets went south and all his plans changed. “I’ve been looking more carefully at Medicare. The cover’s not so bad, so I’m looking at policies to top up the cover to get the best budgeted treatments whenever possible.” He smiled. “I’ve been doing the round of the same agents. Boy, were they pleased to see me again.” We talked about whether he was using the internet. “I’ve been following the AARP’s campaign, Divided We Fail, and their plans for an HMO for Medicare folk like me look interesting. I’ve been using the online sites to get quotes as well. It’s more effort because not all of them are set up to do specialized cover for the elderly, but there’ve been some interesting quotes.“

Dave’s been a revelation. He has plenty of experience in planning his financial affairs and has been playing the field when it comes to getting insurance quotes. As more savvy people start looking for Medigap policies, the market is likely to get more competitive and the existing discounts and incentives are likely to improve. When actual retirement is coming up, look round carefully for the right cover for you.